Avid 2011 Annual Report Download - page 37

Download and view the complete annual report

Please find page 37 of the 2011 Avid annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 103

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103

32
Gross Margin % for the Years Ended December 31, 2011, 2010 and 2009
Products
Services
Total
2011 Gross
Margin %
53.2%
52.5%
52.7%
Increase in
Gross Margin %
1.1%
0.1%
1.0%
2010 Gross
Margin %
52.1%
52.4%
51.7%
(Decrease)
Increase in
Gross Margin %
(0.1)%
2.3%
0.3%
2009 Gross
Margin %
52.2%
50.1%
51.4%
As our software-only products generally have higher margins than products that are hardware-based, our improved products gross
margin percentage during 2011, compared to 2010, was largely driven by increased revenues from software-only products such as
Avid Studio, Media Composer software and Pro Tools software. The products gross margin percentage for 2011 also benefited
from favorable currency exchange rates, but was negatively impacted by certain unusual charges recorded in 2011, including a
charge related to a change in our third-party logistics provider in North America.
Increased products costs resulted in a slight decrease in products gross margin percentage in 2010, compared to 2009. Increased
freight costs resulting from increased shipment volumes, including the increased use of more expensive air freight to support new
product introductions and meet increased demand for certain products, was a significant factor in the increased product costs.
Additionally, the unfavorable impact on revenues of changes in foreign currency exchange rates was also a factor in our products
gross margin percentage decrease in 2010.
The slight increase in services gross margin percentage for 2011, compared to 2010, was the result of increased services revenues,
partially offset by the impact of increased costs to provide professional services in 2011. The professional services costs for 2011
included loss provisions related to professional services contracts assumed as part of a 2010 acquisition. The increase in services
gross margin percentage for 2010, compared to 2009, primarily resulted from improved utilization of services resources.
OPERATING EXPENSES AND OPERATING LOSS
Operating Expenses and Operating Loss for the Years Ended December 31, 2011 and 2010
(dollars in thousands)
Research and development expenses
Marketing and selling expenses
General and administrative expenses
Amortization of intangible assets
Restructuring and other costs, net
Loss (gain) on sales of assets
Total operating expenses
Operating loss
2011
Expenses
$ 118,108
183,865
57,851
8,528
8,858
597
$ 377,807
$(20,781)
Change
$
$(2,121)
6,687
(6,494)
(1,215)
(11,592)
5,626
$(9,109)
$ 15,387
%
(1.8)%
3.8%
(10.1)%
(12.5)%
(56.7)%
n/m
(2.4)%
(42.5)%
2010
Expenses
$ 120,229
177,178
64,345
9,743
20,450
(5,029)
$ 386,916
$ (36,168)